Home » The Fiscal Strengthening Fund, key to the dispute between the Buenos Aires government and Milei

The Fiscal Strengthening Fund, key to the dispute between the Buenos Aires government and Milei

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The Fiscal Strengthening Fund, key to the dispute between the Buenos Aires government and Milei

The national government ordered the elimination of the Fiscal Strengthening Fund of the province of Buenos Aires which had been created during the administration of Alberto Fernández, so Governor Axel Kicillof announced that he will go to the Supreme Court of Justice to obtain the return of those resources.

The Strengthening Fund – eliminated through Decree 192/2024 published this Monday in the Official Gazette – allocated to the province of Buenos Aires a percentage of additional co-shareable resources that the City of Buenos Aires received from the transfer of the Federal Police.

Given the decision of the national government, Governor Axel Kicillof criticized President Javier Milei saying that “it abandons its most basic obligations, subjects the people to a savage adjustment and steals the resources of the provinces.”

After the conflict with Chubut, Milei targets Kicillof and withdraws a key Buenos Aires fund

“To be clear, they are not resources from a government or a governor, they are from the people of the province of Buenos Aires. The Fiscal Strengthening Fund for the province that has been used for three years and was within the extended budget,” the governor warned in a conference at the headquarters of the provincial Executive in La Plata.

“It is a fact of such seriousness that we have received support from all the political forces of the PBA and from governors from the rest of the country. The national government steals the resources of the provinces, which do not belong to a government but to the people,” he added. the mandatary.

In this framework, the governor confirmed that the Province will present “a precautionary order to replenish the funds” that Milei deregistered and that Kicillof remarked that they were used for “recover police salaries y buy patrol cars and equipment“.

What is the Fiscal Strengthening Fund of the Province of Buenos Aires

The National Government made the decision to eliminate the Fund for the Fiscal Strengthening of the Province of Buenos Aireswhich involved the transfer of a percentage of the co-participation destined for the City of Buenos Aires to the province of Buenos Aires. This measure was made official through Decree 192/2024, published in the Official Gazette.

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The creation of this fund was a response to a conflict that arose in September 2020 due to a salary claim from the Buenos Aires Police. Until that moment, the City of Buenos Aires received an additional percentage of shared resources due to the transfer of the Federal Police into its orbit.

At that time, the Government had justified the decision that implied a transfer of $30,000 million to the Buenos Aires Executivebecause “we have to look for resources in a complicated fiscal situation”, ensuring that “we are diverting many resources from the State to the most unprotected sectors.”

Decree 192 grants powers to the Chief of Staff, Nicolás Posse, to make the budget modifications necessary to implement this measure, while the Ministry of Economy may dictate the relevant complementary regulations.

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In its recitals, The Executive holds the previous government responsible for the need to carry out this fiscal adjustmentstating that it is essential to adopt measures in the face of the exceptional economic and social conditions facing the country.

The Fund for the Fiscal Strengthening of the Province of Buenos Aires was created during the presidency of Alberto Fernández through Decree No. 735/2020 with the objective of reducing disparities between the Province and the City of Buenos Aires in budgetary terms. A reduction in the sending of funds to the City was established from 2.32% to 1.40% of the levies established by law.

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This fund sought to restore the balance between the City and the Province of Buenos Aires, assigning a coefficient equivalent to 2.32% for the City and allocating the rest to the Province. HE highlighted the importance of equity and solidarity in the distribution of shared resourcesprioritizing development, quality of life and equal opportunities.

The Milei Government decided to end this fund, arguing in the decree that “the severity of the crisis puts at risk the very subsistence of the social, legal and political organization established, affecting its normal development in pursuit of the common good.”

Likewise, in the recitals he maintained that “no other national administration has received an institutional inheritance, economic and social as critical as that received by the currentso it is essential to adopt measures to overcome the emergency situation created by the exceptional economic and social conditions that the Nation is suffering from, especially as a consequence of a set of interventionist decisions.”

The meeting between governors and PRO deputies was suspended at the request of Ignacio Torres from Chubut

Continuing along this line, the official text assured that “in order to solve the enormous number of problems derived from the inheritance that the outgoing administration left to all Argentines, it is necessary to carry out a fiscal adjustment in the National Public Sector of 5 points of the GDP and, at the same time, resolve the situation of the remunerated liabilities of the Central Bank of the Argentine Republic, which are responsible for the 10 points of its deficit.”

Given the panorama described, The Executive considered that “there is no alternative solution to an urgent fiscal adjustment that puts public accounts in order.”this being an indispensable condition for the macroeconomic stabilization that our country requires” pointing out that “the fiscal situation of the Provinces and the City has been less restrictive at the expense of the discretionary transfers that the National Government has made.”

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When questioning the Nation’s aid to the government of Axel Kicillof, the decree noted that “the aforementioned Fiscal Strengthening Fund of the Province of Buenos Aires affected the general interests of the Nation as a whole, depriving the National State of resources necessary for the organization of public accounts, which is why it is necessary to repeal article 4 of Decree No. 735 of September 9, 2020.”

Elimination of this background raises questions about the future fiscal balance between the City and the Province of Buenos Airesand its implications for the development and well-being of both jurisdictions.

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